Channels ready for cross-border Rmb flows?
Over the past few years, China has been creating channels to allow a two-way cross-border flow of Renminbi (Rmb) funds to internationalise its currency. As the legal framework for this is still nascent, investors need to be cautious of practical hurdles and uncertainties
Issue: October 2011
Keywords (click to search):
Rmb
yuan
internationalise
cross-border
Mayer Brown JSM
A Chinese geomantic (feng shui) theory believes that flowing water symbolises the flow of money, which tends to bring about luck and prosperity. There is no doubt that the PRC government has come a long way in establishing a regulatory regime to facilitate the outflows and inflows of the domestic currency, Rmb since 2009 for the settlement of international trade payments and investment. This article aims to provide an overview of the current legal framework for two-way cross-border Rmb flows and to discuss possible future developments in this regard.
Pilot scheme
A huge amount – over Rmb950 billion in the first half of 2011, according to statistics from the People’s Bank of China (PBoC) – of Rmb has flowed out of the PRC to settle cross-border trades and services since a pilot scheme of cross-border Rmb settlements (the Pilot Scheme) was introduced on July 1 2009 under the Administrative Measures...
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